The administrative court of Orleans decided on May 2, 1995 that any non-distributed amounts which have increased the value of corporate assets of the partnership, provided that these amounts correspond to earnings or capital gains which have previously been realised and already taxed, can be deducted from the capital gains realised on the transfer of shares owned by a partner in a partnership, proportionately to the rights of the partner. In this particular case, a corporation held shares in a real estate partnership which owned a real-estate complex. Following a fire, the partnership received insurance compensation, which generated a capital gain, which was then immediately taxed at the partners' level. Since the compensation was used solely to rebuild the real-estate complex, when the company sold its shares in the partnership it deducted the amount of the previously-taxed capital gain from the difference between the sale price and the nominal value of these shares, in order to determine the amount of the capital gain liable to tax. The authorities challenged this deduction, but this was not accepted by the Court which ruled in favour of the petitioning company.

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